Why prediction market execs could face an existential threat in Supreme Court

Prediction market executives are increasingly laying bets on the risk that their fast-growing business faces an existential threat from the US Supreme Court, On The Money has learned.That was a key takeaway from the “Predict” conference on Wednesday in Manhattan sponsored by organizer DealFlow, which (full disclosure) hired me as a moderator.The event featured panels on how prediction platforms can further expand an $188 billion industry that surged more than 70% this summer versus the previous three months.They’re looking outside of sports, which currently dominates the niche.

That could mean more wagering on high-profile M&A deals (Skydance’s recent purchase of WBD was one of the recent biggies), or picking winners of “Dancing With The Stars” or the upcoming midterm races in hotly contested Senate seats in Texas and Michigan.Prediction markets are dominated by men, so there’s also lots of talk about how the market can better appeal to women.Yes, there’s plenty of room for growth, industry execs say.

That’s the good news.The bad news is what’s looming that could screw it all up. The US government considers wagers placed in prediction markets akin to buying a futures contract; thus on the federal level you get oversight from the Commodity Futures Trading Commission and the Securities and Exchange Commission.

That lighter-touch regulation by the feds is exactly what has led to the explosive growth.But many states are taking the position that prediction markets are a form of gambling, pure and simple.That means the biggest players, Polymarket and Kalshi, need to be registered with on the state level and comply with local gambling laws or face civil litigation.Places like New York have begun to file cases asserting that these venues are actually gambling dens.

In fact, nearly two dozen states have active cases on the docket sowing confusion across the industry.There is only one solution to set the record straight and that would be SCOTUS co...